On-line Booking and Revenue. Low-Cost Airline. Claudio Piga. Economic Analysis Seminar at Fondazione Eni Enrico Mattei.
|
|
- Christian Hodges
- 6 years ago
- Views:
Transcription
1 On-line Booking and Revenue Management: Evidence from a Low-Cost Airline Claudio Piga Loughborough University and Rimini Centre for Economic Analysis Seminar at Fondazione Eni Enrico Mattei Introduction In three influential papers, Dana analysed how revenue management can be effectively used when capacity is costly and firms set prices BEFORE demand is known. In all these papers, price dispersion arises as a consequence of the assumptions of the model, and it does not imply a carrier s intention to price discriminate. A crucial assumption is that the airlines have to commit to a pricing schedule and will not update it; i.e., the solutions are not sub-game perfect. 1
2 Price Dispersion & Demand uncertainty Dana (1999, Rand) Costly capacity and prices set before the actual realisation of demand is known; in practice, the firm has to decide the level of prices and the associated number of seats it will sell for each possible realization of demand. For the case of two-states demand (low and high), the firm will set two prices and the corresponding number of tickets available at each price. The analysis consider the case in which the firm operates in different market structures. Dana (1999, Rand) Dana shows that regardless of the market structure, the firm should determine different ``batches'' of seats, and that fares should increase as fewer batches remain unsold. That is, the profile of fare should be an increasing function of the number of sold seats. The domain over which this function is distributed should increase with the degree of competition on a route or market There is no room for intertemporal price discrimination in Dana s work. 2
3 Eq. Supply Price Distributions Price support increases with competition. Further from Dana (1999) Another important feature of the model is the commitment of the firm to the schedule of prices it set before demand is known. Such a price rigidity may arise because the firm must incur a very high cost in tracking the evolution of demand for all the flights it operates and adjust fares to reflect demand conditions. This appears to run contrary to the current standard practice in the industry. 3
4 Literature There are no studies that try to link the paid fare for a seat on a flight with the number of available seats on that flight. Escobari and Li Gan (2006, NBER) and Puller, Sengupta and Wiggins (2009, NBER) try to obtain this information by merging two different dataset; their analysis is complicated by the complexity of Full Service Carriers Yield Management, that considers a number of ticket classes that are open all at the same time. This work benefits from dealing with the simpler system of a Low Cost Carrier, and allows a more direct test of the implications of Dana s model. Literature Implicitly, this paper studies the effect of (stochastic) peak load pricing on Fare Dispersion; Previous literature has mainly looked into the relationship between Price Discrimination and Price Dispersion (Gerardi and Shapiro, JPE 2009; Borenstein and Rose, 1994; Gaggero and Piga, 2010) 4
5 A quote from EU CC investigation of the FR and AL takeover The first software type which both companies use is a system that tracks the booking status of each flight, provides forecasts for the further development and makes proposals for the pricing pattern. This software allows the responsible yield manager or analyst to verify the booking status for any given Ryanair or Aer Lingus flight. With the help of the program, the analyst can compare the actual booking status (or load factor ) of a flight with the booking forecast which is provided by the system. This booking forecast is based on previous experience with the same route at the relevant dates or on similar routes. The forecasts are adjusted according to forecasted growth and other relevant changes of the factors affecting supply and demand on the route. Study objectives Derive a pricing curve for Ryanair, a European Low Cost Carrier; Test the hypothesis of the relationship between price dispersion and market structure. Assess whether and how the adjustment to a pricing template are made, i.e., assess whether the commitment story by Dana has important implications 5
6 Mergers and Business Model Assimilation: Low-Cost Airlines Paul Dobson and Claudio Piga LCA Business Model Characteristics 11 Mergers and Business Model Assimilation: Low-Cost Airlines Paul Dobson and Claudio Piga LCA Business Model Characteristics 1. Simple pricing structures one passenger class; fares only cover basic transport 2. Each leg priced independently; 3. Direct selling - internet bookings, electronic tickets, no seat reservations 4. Point-to-point networks using cheaper, less congested airports 5. Intensive aircraft usage (25-min turnaround times) 6. Multiple role employees (flight attendants-cleaners-gate agents) 7. Highly standardised fleets (Ryanair operates only Boeing 737 with 189 seats each) 12 6
7 Mergers and Business Model Assimilation: Low-Cost Airlines Paul Dobson and Claudio Piga Data Collection #1 Primary data on posted fares and secondary data on routes traffic posted fares collected using an electronic spider from main LCAs (inc, Ryanair, Buzz, Easyjet, GoFly) Only for Ryanair, data on seats availability could be obtained for up to 50 seats This was possible due to the features of the carrier s on-line reservation system Period for this study: 2004-June Mergers and Business Model Assimilation: Low-Cost Airlines Paul Dobson and Claudio Piga Data Collection #2 Fares cover routes from/to UK, inc. domestic and main European destinations LCA fares collected for booking days before departure at intervals of 1, 4, 7, 10, 14, 21, 28, 35, 42, 49, 56, 63 and 70 days Data on routes traffic (inc load factors) obtained from the CAA 14 7
8 An example of data Fixed Upper Boundary Price 1 seat Price 1 seat query= 47 Airplane full Query= 16 The revenue management software defines a maximum threshold which corresponds to the price of the last seat. This can be obtained by any query that closes the flight. The threshold is independent of the current occupancy rate Full Plane N. Of seats sold (out of last 50) all seats sold 8
9 Fixed Upper Boundary P In reality, each pricing profile is a step function, although h aggregation over time may produce a smoother profile. P 2 P Full Plane N. Of seats sold (out of last 50) all seats sold Gatwick - Dublin inv_seat Graphs by D_seasons 9
10 Gatwick Dublin - Lnprice inv_seat Median spline Graphs by D_seasons London Stansted-Berlin inv_seat Graphs by D_seasons 10
11 London Stansted-Berlin - lnprice inv_seat Median spline Graphs by D_seasons Bristol - Dublin inv_seat Graphs by D_seasons 11
12 Bristol- Dublin - Lnprice inv_seat Median spline Graphs by D_seasons Monotonic Prices? Not always! 12
13 Monotonic Prices Estimation Available seats are measured from 49 to 1 So av_ seat is censored. The variable used in the estimation is Inv_seat=50 av_seat (this gives a positive slope). Estimates are obtained assuming that inv_seat (or av_seat) is exogenous But consider the following: 13
14 We want to estimate p it Panel Fixed Effect = 1 it + 2 it i it β Q + β X + δ + ε i is a flight, t identifies booking days. We cannot rule out that Q it and p it, are both correlated with ε it; and that they are jointly determined; hence we treat Q it as endogenous. Following Wooldridge, the instrument used is the expected value of av_seat, obtained from a Tobit model that includes as regressors many factors which could be interpreted as demand shifters. These are: i.booking_day d_base_both d_promo i.day_week shr_fli_city_subp ln_dist d_deptime /// n_route_comp_in_city n_flights_tot_route n_flights_tot_city n_flights_comp_city n_flights_comp_route Any correlation with δ i is taken care of by the fixed effect estimator. Basic Model FE Dependent: Ln(Price) xtreg1 xtiv1 xtreg2 xtiv2 xtreg3 xtiv3 inv_seat 0.044a 0.043a 0.036a 0.042a 0.030a 0.040a book_day a a 0 book_day a a book_day a a b a book_day a a b a book_day a a a a book_day a a a a book_day a a b a book_day b a a book_day book_day book_day c book_day d_promo a a Constant 2.850a 2.871a 3.172a 3.164a 3.240a 3.228a R-2w r2_o
15 Does Ryanair update? Maybe yes xtreg4 xtiv4 xtreg5 xtiv5 xtreg6 xtiv6 inv_seat 0.030a 0.041a 0.029a 0.038a 0.028a 0.037a book_day a a a 0 book_day a a a book_day a a a a a a book_day a a a a a a book_day a a a a a a book_day a a a a a a book_day a a a a a a book_day a c a c a book_day book_day book_day c c c book_day d_promo a a a a a a uncert21_ a 0.185a uncert14_ c uncert10_ b a uncert21_ a 0.152a uncert14_ a 0.070a uncert10_ a uncert21_ a 0.107a uncert14_ a 0.065a uncert10_ a 0.049a Constant 3.314a 3.252a 3.336a 3.289a 3.342a 3.308a R-2w Maybe No xtreg4 xtiv4 xtreg5 xtiv5 xtreg6 xtiv6 inv_seat 0.044a 0.047a 0.042a 0.044a 0.041a 0.041a d_promo a a a a a a uncert21_ c 0.057a uncert14_ a a uncert10_ a a uncert21_ b uncert14_ a a uncert10_ a a uncert21_ uncert14_ a a uncert10_ a Constant 2.989a 2.937a 2.985a 2.950a 2.995a 2.979a R2w r2_o
16 Market Structure? Maybe no Monopoly Duo-Triopoly xtreg3 xtiv3 xtreg4 xtiv4 inv_seat 0.029a 0.040a 0.035a 0.039a book_day a c 0 book_day c a a book_day a a a book_day a a a book_day b a a a book_day c a a a book_day a a a book_ day b b a book_day book_day book_day b book_day b c d_promo a a a a Constant 3.251a 3.231a 3.235a 3.240a R-2w r2_o Market Structure? Maybe yes Monopoly Duo-Triopoly xtreg3 xtiv3 xtreg4 xtiv4 inv_seat 0.038a 0.039a 0.044a 0.042a d_promo a a a a Constant 3.057a 3.047a 2.818a 2.854a R-2w r2_o
17 FULL SAMPLE xtreg1 xtiv1 xtreg2 xtiv2 xtreg3 xtiv3 inv_seat 0.046a 0.084a 0.004a 0.083a 0.012a 0.061a book_day a a 0 book_day a 0.245a 1.009a 0.065a book_day a a 0.555a a book_day a a 0.491a a book_day a a 0.170a a book_day a 0.101a a book_day b a 0.051a a book_day a a 0.038b c book_day b a 0.042a 0.012c book_day a 0113a a 0156a a 0026a book_day a a a a book_day a a a a d_promo a a Constant 2.265a 2.012a 2.145a 2.164a 2.695a 2.724a R-2w r2_o Full Sample & Market Structure Monopoly Duo-Triopoly xtiv1 xtiv2 xtiv3 xtiv4 inv_seat 0058a 0.058a 0063a 0.063a 0053a 0.053a 0055a 0.055a d_promo a a a a book_day1 0 0 book_day a 0.045a book_day a a book_day a a book_day a a book_day a a book_day a a book_day book_day c book_day a book_day a a book_day a a Constant 2.710a 2.738a 2.597a 2.648a R-2w r2_o
18 Using a monopoly dummy Censored Full Sample xtiv1 xtiv2 xtiv3 xtiv4 inv_seat 0.043a 0.042a 0.055a 0.051a inv_seat_mono a a 0.008a 0.007a book_day1 0 0 book_day a 0.066a book_day a a book_day a a book_day a a book_day a a book_day a a book_day a c book_day c book_day a book_day c a book_day a d_promo a a a a Constant 3.229a 3.006a 2.723a 2.691a R-2w r2_o
On-line Booking and Revenue Management: Evidence from a Low-Cost Airline
On-line Booking and Revenue Management: Evidence from a Low-Cost Airline Claudio Piga Loughborough University and Rimini Centre for Economic Analysis Seminar at Fondazione Eni Enrico Mattei Introduction
More informationTransportation Research Forum
Transportation Research Forum Price Dispersion in the U.S. Airline Industry Author(s): Junwook Chi, Won W. Koo, and Siew H. Lim Source: Journal of the Transportation Research Forum, Vol. 48, No. 3 (Fall
More informationThe hidden side of dynamic pricing in airline markets
MPRA Munich Personal RePEc Archive The hidden side of dynamic pricing in airline markets Marco Alderighi and Alberto A Gaggero and Claudio A Piga Universitá della Valle d Aosta, Italy, University of Pavia,
More informationRevisiting the Relationship between Competition and Price Discrimination in the Airline Industry
Revisiting the Relationship between Competition and Price Discrimination in the Airline Industry Ambarish Chandra a,b Mara Lederman a May 4, 2015 a : University of Toronto, Rotman School of Management
More informationPrice Discrimination. It is important to stress that charging different prices for similar goods is not pure price discrimination.
What is price discrimination? Price discrimination or yield management occurs when a firm charges a different price to different groups of consumers for an identical good or service, for reasons not associated
More informationSummary Marketing Plan 1. Summary Marketing Plan
Summary Marketing Plan 1 Summary Marketing Plan Summary Marketing Plan 2 Table of Contents 0.1 Company Overview... 3 0.2 Executive Summary of Marketing Plan... 3 1.0 Description of the Target Market...
More informationDynamic Oligopoly Pricing: Evidence from the Airline Industry
Discussion Paper No. 463 Dynamic Oligopoly Pricing: Evidence from the Airline Industry Caspar Siegert * Robert Ulbricht ** * University of Munich ** Toulouse School of Economics March 2014 Financial support
More informationPrice Discrimination in Advance-Purchase Discounts with Focal Points for Tacit Collusion: Regression-Discontinuity Evidence from Airlines
Price Discrimination in Advance-Purchase Discounts with Focal Points for Tacit Collusion: Regression-Discontinuity Evidence from Airlines Diego Escobari Nicholas G. Rupp Joseph Meskey April 12, 2016 Abstract
More informationThe Robustness Of Non-Decreasing Dynamic Pricing Laura van der Bijl Research Paper Business analytics Aug-Oct 2017 Prof.
The Robustness Of Non-Decreasing Dynamic Pricing Laura van der Bijl Research Paper Business Analytics Aug-Oct 2017 The Robustness Of Non-Decreasing Dynamic Pricing Laura van der Bijl Laura.vanderbijl5@gmail.com
More informationCASE FAIR OSTER PEARSON 2012 Pearson Education, Inc. Publishing as Prentice Hall
PART II The Market System: Choices Made by Households and Firms PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I T I O N CASE FAIR OSTER PEARSON 2012 Pearson Education, Inc. Publishing as Prentice Hall
More information8 CHAPTER OUTLINE Costs in the Short Run Fixed Costs
e PART II I The Market System: Choices Made by Households and Firms e CASE FAIR OSTER PEARSON 2012 Pearson Education, Inc. Publishing as Prentice Hall PRINCIPLES OF MICROECONOMICS E L E V E N T H E D I
More informationYield Management. Serguei Netessine 1 The Wharton School University of Pennsylvania
Yield Management Serguei Netessine 1 The Wharton School University of Pennsylvania Robert Shumsky 2 W. E. Simon Graduate School of Business Administration University of Rochester February 1999, revised
More informationMeasuring Market Power When Firms Price. Discriminate
Measuring Market Power When Firms Price Discriminate Levent Kutlu Department of Economics Antalya International University Robin C. Sickles Department of Economics Rice University November 23, 2015 Abstract
More information36106 Managerial Decision Modeling Revenue Management
36106 Managerial Decision Modeling Revenue Management Kipp Martin University of Chicago Booth School of Business October 5, 2017 Reading and Excel Files 2 Reading (Powell and Baker): Section 9.5 Appendix
More informationPricing Airline Optional Services
Technical Disclosure Commons Defensive Publications Series December 22, 2016 Pricing Airline Optional Services Stavros Macrakis Michael Leen Daniel Burkhard Follow this and additional works at: http://www.tdcommons.org/dpubs_series
More informationStrategic Management and Competitive Advantage Concepts and Cases
GLOBAL EDITION Strategic Management and Competitive Advantage Concepts and Cases FIFTH EDITION Jay B. Barney William S. Hesterly What s Out? Models, concepts, and topics that don t pass a simple test:
More information1.224J/ESD.204J TRANSPORTATION OPERATIONS, PLANNING AND CONTROL: CARRIER SYSTEMS
1.224J/ESD.204J TRANSPORTATION OPERATIONS, PLANNING AND CONTROL: CARRIER SYSTEMS Professor Cynthia Barnhart Professor Nigel H.M. Wilson Fall 2003 1.224J/ ESD.204J Outline Sign-up Sheet Introductions Carrier
More informationDP Entry and Accommodation in Airline Markets: Easyjet Caught in the Middle on the London-Grenoble Route
DP 2006 02 Entry and Accommodation in Airline Markets: Easyjet Caught in the Middle on the London-Grenoble Route Cristina Barbot January 2006 CETE Centro de Estudos de Economia Industrial, do Trabalho
More informationProject Overview: SMALL AIR TRANSPORT ROADMAP
http://sat-rdmp.eu/ Project Overview: In the SAT-Rdmp (Support Action) a Vision and Research Agenda on the development of a Small Aircraft Transportation system (SAT system) have been developed. The major
More informationGeneral Certificate of Education Advanced Level Examination June 2011
General Certificate of Education Advanced Level Examination June 2011 Economics ECON3 Unit 3 Business Economics and the Distribution of Income Friday 17 June 2011 1.30 pm to 3.30 pm For this paper you
More informationPotential Benefits of Operations
Destination Green ICAO Symposium on Aviation and Climate Change, Destination Green, 14 16 May 2013 Potential Benefits of Operations John-Paul B. Clarke Associate Professor Daniel Guggenheim School of Aerospace
More informationSuccess Stories. Industry Overview. Services Portfolio. Provide Services, Products & Frameworks and Consultancy. Airlines Services
Social Media Strategy Our domain and technology expertise, coupled with a fully integrated end-to-end managed services offering, enables airlines to improve service quality and service levels for business
More informationAirline Management Solutions. ProfitLine. The integrated solution for revenue management and pricing
Airline Management Solutions ProfitLine The integrated solution for revenue and pricing Contents Airline network planning and control 2 Revenue and pricing 4 ProfitLine 5 ProfitLine Services 6 Pricing
More informationMonopoly. PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University
15 Monopoly PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Market power Why Monopolies Arise Alters the relationship between a firm s costs and the selling price Monopoly
More informationAirport de-hubbing and international trade: evidence from Lombardy
Airport de-hubbing and international trade: evidence from Lombardy Flavia Cifarelli Department of Policy Analysis and Public Management Università Bocconi Marco Percoco Department of Policy Analysis and
More informationCOST OF PRODUCTION & THEORY OF THE FIRM
MICROECONOMICS: UNIT III COST OF PRODUCTION & THEORY OF THE FIRM One of the concepts mentioned in both Units I and II was and its components, total cost and total revenue. In this unit, costs and revenue
More informationThe Taussig & Pigou Controversy
The Taussig & Pigou Controversy The T&P controversy boiled down to two questions: () Can price differentials that look like price discrimination be efficient? () Can these price differentials be sustained
More informationDevelopments and Challenges for Aluminum A Boeing Perspective
Proceedings of the 9 th International Conference on Aluminium Alloys (2004) Edited by J.F. Nie, A.J. Morton and B.C. Muddle Institute of Materials Engineering Australasia Ltd 24 Developments and Challenges
More informationAggregate Planning and S&OP
Aggregate Planning and S&OP 13 OUTLINE Global Company Profile: Frito-Lay The Planning Process Sales and Operations Planning The Nature of Aggregate Planning Aggregate Planning Strategies 1 OUTLINE - CONTINUED
More informationChapter 7: Market Structures Section 2
Chapter 7: Market Structures Section 2 Objectives 1. Describe characteristics and give examples of a monopoly. 2. Describe how monopolies, including government monopolies, are formed. 3. Explain how a
More informationEstimating Airlines Dynamic Price Competition
Estimating Airlines Dynamic Price Competition Nan Chen October 25, 2017 Abstract Dynamic pricing has become a common practice in many industries, but its effect under competition is uncertain due to the
More informationCOST THEORY. I What costs matter? A Opportunity Costs
COST THEORY Cost theory is related to production theory, they are often used together. However, here the question is how much to produce, as opposed to which inputs to use. That is, assume that we use
More informationMasters Degree in Business Administration & Diploma in Management Studies. Vasiliki Kazantzi, PhD
Technological Education Institute of Larissa Department of Project Management School of Business Administration Staffordshire University, Business School Masters Degree in Business Administration & Diploma
More informationMarket structures. Why Monopolies Arise. Why Monopolies Arise. Market power. Monopoly. Monopoly resources
Market structures Why Monopolies Arise Market power Alters the relationship between a firm s costs and the selling price Charges a price that exceeds marginal cost A high price reduces the quantity purchased
More informationAir cargo revenue management
INNOVATION OUTLOOK TRANSPORT SERIES Air cargo revenue management March 2015 March 2015 Page 1 of 19 The authors would like to thank the partners of the T-TRANS Project Consortium for their collaboration
More informationChristiane Schmit Head of Marketing, BD & Comms 13 July 2016
Christiane Schmit Head of Marketing, BD & Comms 13 July 2016 Allen & Overy 2016 Allen & Overy 2016 2 Objectives Attract talent Convey an attractive image of our firm Content Diffusing job offers Promoting
More informationDiscussion Paper Advances in Airline Pricing, Revenue Management, and Distribution
Discussion Paper Advances in Airline Pricing, Revenue Management, and Distribution Implications for the Airline Industry Prepared for ATPCO by PODS Research LLC Peter P. Belobaba William G. Brunger Michael
More informationWelcome to Hahn Air. ASTA 16 November Welcome to Hahn Air 17 November,
Welcome to Hahn Air One Globe One Ticket ASTA 16 November 2011 Welcome to Hahn Air 17 November, 2011 0 Speaker Steve Beck Director Global Account Management North America Welcome to Hahn Air 17 November,
More informationManagerial Economics
Managerial Economics Unit 4: Price discrimination Rudolf Winter-Ebmer Johannes Kepler University Linz Winter Term 2017 Managerial Economics: Unit 4 - Price discrimination 1 / 39 OBJECTIVES Objectives Explain
More informationUnderstanding Aviation Emissions on the Global Level
Understanding Aviation Emissions on the Global Level Lynnette Dray, University of Cambridge Advanced Aerospace Structures Seminar 24 th April 2012, Rotherham Global Air Transportation Contributes about
More informationManagerial Economics
Managerial Economics Unit 4: Price discrimination Rudolf Winter-Ebmer Johannes Kepler University Linz Winter Term 2014 Managerial Economics: Unit 4 - Price discrimination 1 / 39 OBJECTIVES Objectives Explain
More informationThe Effect of Applying Price Discrimination Strategy on the Marketing Performance of Five Stars Hotels Located in Amman Jordan
The Effect of Applying Price Discrimination Strategy on the Marketing Performance of Five Stars Hotels Located in Amman Jordan Elham Fakhri Tomalieh University of Petra, Jordan, P.O Box 961343 Amman 11196
More informationECON 115. Industrial Organization
ECON 115 Industrial Organization 1. Linear (3rd Degree) Price Discrimination First Hour QUIZ Second Hour Introduction to Price Discrimination Third-degree price discrimination Two Rules Examples of price
More informationFINALTERM EXAMINATION FALL 2006
FINALTERM EXAMINATION FALL 2006 QUESTION NO: 1 (MARKS: 1) - PLEASE CHOOSE ONE Compared to the equilibrium price and quantity sold in a competitive market, a monopolist Will charge a price and sell a quantity.
More informationCHAPTER 12 Pricing CHAPTER OUTLINE
CHAPTER 12 Pricing CHAPTER OUTLINE 12.1 Why and How Firms Price Discriminate Why Price Discrimination Pays Who Can Price Discriminate Preventing Resales Not All Price Differences Are Price Discrimination
More informationAir Ticket Sales as Bids from Airline Alliances
Air Ticket Sales as Bids from Airline Alliances Marc Ivaldi, Milena Petrova, Miguel Urdanoz December 8, 2014 Abstract Motivated by the higher price sensitivity and service homogenisation in the airline
More informationCost Leadership. The SunTrust Guide to Competitive Strategy 1
Cost Leadership The SunTrust Guide to Competitive Strategy 5 Ways to Become a Cost Leader Use this checklist to refine your company s approach to pricing. Ensure access to growth capital and efficient
More informationChapter 13. Oligopoly and Monopolistic Competition
Chapter 13 Oligopoly and Monopolistic Competition Chapter Outline Some Specific Oligopoly Models : Cournot, Bertrand and Stackelberg Competition When There are Increasing Returns to Scale Monopolistic
More informationChapter 10: Monopoly
Chapter 10: Monopoly Answers to Study Exercise Question 1 a) horizontal; downward sloping b) marginal revenue; marginal cost; equals; is greater than c) greater than d) less than Question 2 a) Total revenue
More informationOther examples of monopoly include Australia Post.
In this session we will look at monopolies, where there is only one firm in the market with no close substitutes. For example, Microsoft first designed the operating system Windows. As a result of this
More informationForecasting, Overbooking and Dynamic Pricing
Forecasting, Overbooking and Dynamic Pricing Block 2 Zaenal Akbar (zaenal.akbar@sti2.at) Copyright 2008 STI INNSBRUCK Agenda 1. Estimation and Forecasting 2. Overbooking 3. Dynamic Pricing 2 Where we left
More informationIMPROVEMENT OF TAROM ACTIVITY BY THE REVENUE MANAGEMENT SYSTEM. Cătălin PETRUŞ 1 Cristina STATE 2
IMPROVEMENT OF TAROM ACTIVITY BY THE REVENUE MANAGEMENT SYSTEM Cătălin PETRUŞ 1 Cristina STATE 2 ABSTRACT The aim of our research is to highlight ways of efficiency of activity of TAROM through implementation
More informationEco 300 Intermediate Micro
Eco 300 Intermediate Micro Instructor: Amalia Jerison Office Hours: T 12:00-1:00, Th 12:00-1:00, and by appointment BA 127A, aj4575@albany.edu A. Jerison (BA 127A) Eco 300 Spring 2010 1 / 66 Page 261,
More informationLecture 6 Pricing with Market Power
Lecture 6 Pricing with Market Power 1 Pricing with Market Power Market Power refers to the ability of a firm to set its own price, as opposed to firms that are price takers and take market price as given.
More informationEcon Microeconomic Analysis and Policy
ECON 500 Microeconomic Theory Econ 500 - Microeconomic Analysis and Policy Monopoly Monopoly A monopoly is a single firm that serves an entire market and faces the market demand curve for its output. Unlike
More informationEconS 301 Intermediate Microeconomics Review Session #9 Chapter 12: Capturing Surplus
EconS 30 Intermediate Microeconomics Review Session #9 Chapter : Capturing Surplus. With second-degree price discrimination a) The firm tries to price each unit at the consumer s reservation price. b)
More informationMONOPOLY SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes
1 MONOPOLY SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. A market might have a monopoly because: (1) a key resource is owned by a single firm; (2) the government gives a single firm the exclusive right
More informationGROUP ON INTERNATIONAL AVIATION AND CLIMATE CHANGE (GIACC) FOURTH MEETING
International Civil Aviation Organization INFORMATION PAPER GIACC/4-IP/12 22/5/09 English only GROUP ON INTERNATIONAL AVIATION AND CLIMATE CHANGE (GIACC) FOURTH MEETING Montréal, 25 to 28 May 2009 Agenda
More informationEstimation, Forecasting and Overbooking
Estimation, Forecasting and Overbooking Block 2 Zaenal Akbar (zaenal.akbar@sti2.at) Copyright 2008 STI INNSBRUCK Agenda Topics: 1. Estimation and Forecasting 2. Overbooking Tuesday, 21.03.2017 1 146418
More informationCONNECTED GROUND SERVICE EQUIPMENT (GSE) HCL s IOT-enabled solution for tracking and monitoring airline assets
www.hcltech.com CONNECTED GROUND SERVICE EQUIPMENT (GSE) HCL s IOT-enabled solution for tracking and monitoring airline assets INTRODUCTION In a world inundated with waves of disruptive technologies, few
More informationBabu Madhav Institute of Information Technology, UTU 2017
Five Years Integrated M.Sc. (IT) Semester 3 Question Bank 060010312 CC9 Software Engineering Unit 1 Introduction to Software Engineering and Object-Oriented Concepts 1. What is software? 2. Which documents
More informationWhy do monopolies charge different prices to different customers: price discrimination: eg mobile phone tariffs)
Why do monopolies charge different prices to different customers: price discrimination: eg mobile phone tariffs) We have previously seen how a monopolist chooses his profit maximising output - Which is
More informationChapter 15: Pricing and the Revenue Management. utdallas.edu/~metin
Chapter 15: Pricing and the Revenue Management 1 Outline The Role of RM (Revenue Management) in the SCs RM for Multiple Customer Segments RM for Perishable Assets RM for Seasonable Demand RM for Bulk and
More informationATC regulation in a union bargaining model setting
ATC regulation in a union bargaining model setting 11th US/EU ATM Seminar, Lisbon Stef Proost (KU Leuven & TML) Amihai Glazer (UC Irvine) Thomas Blondiau (TML) ACCHANGE Air traffic control: guide planes
More information7 The Optimum of Monopoly, Price Discrimination
Microeconomics I - Lecture #7, March 31, 2009 7 The Optimum of Monopoly, Price Discrimination 7.1 Monopoly Up to now we have analyzed the behavior of a competitive industry, a market structure that is
More informationThrow Out Fixed And Variable Cost Thinking Bring In Activity-Based Costing To Business Decisions
W H I T E P A P E R I Throw Out Fixed And Variable Cost Thinking Bring In Activity-Based Costing To Business Decisions BY D R. R O G E R K. H A R V E Y Dr. Roger K. Harvey is President of Value Associates,
More informationDEPARTURES FROM TALLINN
Tallinn Airport does everything possible to always keep up the accurate flight information, but does not quarantee that the information on this page is correct. Any consequences rising from using information
More informationMarket Structures. Perfect competition Monopolistic Competition Oligopoly Monopoly
Market Structures The classification of market structures can be arranged along a continuum, ranging from perfect competition, the most competitive market, to monopoly, the lease competitive: Perfect competition
More informationMonopoly. While a competitive firm is a price taker, a monopoly firm is a price maker.
Monopoly Monopoly While a competitive firm is a price taker, a monopoly firm is a price maker. Monopoly A firm is considered a monopoly if... it is the sole seller of its product. its product does not
More informationMonopoly. Chapter 15
Monopoly Chapter 15 Monopoly While a competitive firm is a price taker, a monopoly firm is a price maker. Monopoly u A firm is considered a monopoly if... it is the sole seller of its product. its product
More informationThe No-show Problem: Simulation and Revenue Management
Przasnyski The No-show Problem: Simulation and Revenue Management Zbigniew H. Przasnyski Loyola Marymount University Department of Finance and Computer Information Systems One LMU Drive Los Angeles, CA
More informationA strong tool for public transport planning the software in operation
HOW CAN YOU CREATE PERFECT SERVICES ALL ALONG THE LINE? A STRONG TOOL FOR PUBLIC TRANSPORT PLANNING PTV Visum is the worldwide leading software for demand-driven and serviceoriented public transport network
More informationMonopoly. 3 Microeconomics LESSON 5. Introduction and Description. Time Required. Materials
LESSON 5 Monopoly Introduction and Description Lesson 5 extends the theory of the firm to the model of a Students will see that the profit-maximization rules for the monopoly are the same as they were
More informationiv. The monopolist will receive economic profits as long as price is greater than the average total cost
Chapter 15: Monopoly (Lecture Outline) -------------------------------------------------------------------------------------------------------------------------- Monopolies have no close competitors and,
More informationEstimating unconstrained customer choice set demand: A case study on airline reservation data
Estimating unconstrained customer choice set demand: A case study on airline reservation data Alwin Haensel 1 Ger Koole 1 Jeroen Erdman 2 1 Department of Mathematics, VU University Amsterdam, De Boelelaan
More information1-1 McGraw-Hill/Irwin. Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
1-1 McGraw-Hill/Irwin Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 1 hapter Foundations of Information Systems in Business Why should you study information systems? How does a
More informationHOW BUSINESS AIRFARES CHANGE
January 2014 HOW BUSINESS AIRFARES CHANGE Have you ever wondered, what happens to airfares for business travelers over time? We constantly hear about rising airfares in various markets - maybe we might
More informationeasyjet Pricing Strategy: Should Low-Fare Airlines Offer Last-Minute Deals?
easyjet Pricing trategy: hould ow-fare Airlines Offer ast-inute Deals? Aendi Proosition : he general otimization roblem is reresented by: Period : a ubject to 0 Period : a ubject to 0 and - > 0 hus, we
More informationECON 300 Homework 7 **This homework is for your own benefit and it not turned in**
ECON300Homework7 **Thishomeworkisforyourownbenefitanditnotturnedin** Chapter11questions:3,9,10,14,16,20,25,26,30,41 Chapter12questions:3,7,13,16,18,39 Chapter13questions:1,3,21,26(partaonly) Answers Chapter11questions:
More informationInformation and Information Processing Requirements of Yield Management in Capacity Constrained Service Firms
Information and Information Processing Requirements of Yield Management in Capacity Constrained Service Firms Klaus Weiermair Christine Mathies Center for Tourism and Service Economics University of Innsbruck,
More informationPort Authority of New York & New Jersey Economic Impact Study - Employment Survey DRAFT
The figures you provide in the following sections are strictly confidential. Only aggregate survey totals will be published in the final report. Please complete this survey as soon as possible and no later
More informationChapter 24. Introduction. Learning Objectives. Monopoly
Chapter 24 Monopoly Introduction States have various licensing requirements for individuals who wish to practice specific professions. For example, Ohio requires a $100 license fee to become a kick boxer.
More informationBOEING 1. Copyright 2015 Boeing. All rights reserved.
Maintenance Prognostics Digital solutions to optimize maintenance operations Juan D. Lopez Program Manager, Fleet and Maintenance Solutions September 2015. The statements contained herein are based on
More informationMonopoly. Cost. Average total cost. Quantity of Output
While a competitive firm is a price taker, a monopoly firm is a price maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The
More informationPricing and Revenue Management Driving Profit Improvement from CRM
5.0 White Paper WRITTEN BY Robert L. Phillips, Ph.D. Talus Solutions http://phillips.crmproject.com Pricing and Revenue Management Driving Profit Improvement from CRM Pricing and Revenue Management has
More informationDynamic Pricing in Major League Baseball Tickets: Issues and Challenges
Dynamic Pricing in Major League Baseball Tickets: Issues and Challenges John T. Drea, john.drea@mail.ic.edu* Andrew Nahlik, andrew.nahlik@mail.ic.edu Introduction A rapidly growing trend in the business
More informationISE480 Sequencing and Scheduling
ISE480 Sequencing and Scheduling INTRODUCTION ISE480 Sequencing and Scheduling 2012 2013 Spring term What is Scheduling About? Planning (deciding what to do) and scheduling (setting an order and time for
More informationAlaska & Virgin Airlines: The Route to Success
Alaska & Virgin Airlines: The Route to Success Signal Consulting Kate Boland Nick Lane Greg Piercey Stephanie Daley Memorial University of Newfoundland Agenda Mandate Key Issues Objectives Recommendation
More informationIntroduction. Learning Objectives. Learning Objectives. Economics Today Twelfth Edition. Chapter 24 Monopoly
Roger LeRoy Miller Economics Today Twelfth Edition Chapter 24 Monopoly Introduction The cement market in Mexico is dominated by a single company that accounts for more than 70 percent of all sales. Why
More informationPerfect price discrimination (PPD) 1 Graph. Monopolist sells product with downward-sloping demand curve Each consumer demands one unit: demand curve
Price discrimination Up to now, consider situations where each firm sets one uniform price Consider cases where firm engages in non-uniform pricing: 1. Charging customers different prices for the same
More informationAnalysis of Pre-order Strategies with the Presence of Experienced Consumers
Analysis of Pre-order Strategies with the Presence of Experienced Consumers Chenhang Zeng February 19, 2014 Abstract We study pre-order strategies in a two-period, continuous-valuation model with the presence
More informationEdexcel (B) Economics A-level
Edexcel (B) Economics A-level Theme 4: Making Markets Work 4.1 Competition and Market Power 4.1.2 Barriers to entry Notes Contestability, ease of entry and barriers to entry: Characteristics of contestable
More informationCANSO Global Approach to Safety. Sam Espig NATS
CANSO Global Approach to Safety Performance Measurement Sam Espig NATS Agenda Measures and targets CANSO Safety Strategy ICAO Aviation Safety Index Slide 2 Why set targets? Provide common direction Motivate
More informationAirline Passengers Online Search and Purchase Behaviors: New Insights from an Interactive Pricing Response Model
Airline Passengers Online Search and Purchase Behaviors: New Insights from an Interactive Pricing Response Model Misuk Lee School of Industrial and Systems Engineering Georgia Institute of Technology Atlanta,
More informationARIS/CA capacity analyzer
ARIS/CA capacity analyzer Ascent Technology, Inc. Building 200 One Kendall Square Cambridge, MA 02139-1589 USA Telephone: +1.617.395.4800 email: sales@ascent.com www.ascent.com Plan, analyze, and manage
More informationACCHANGE. Union Bargaining model in ATC. Stef Proost (KULeuven+TML) joint work with Amihai Glazer (UCIrvine) Thomas Blondiau (TML)
ACCHANGE Union Bargaining model in ATC Stef Proost (KULeuven+TML) joint work with Amihai Glazer (UCIrvine) Thomas Blondiau (TML) Motivation 1 Air traffic control in Europe is presently organized by 37
More informationEconomics of Managerial Decision Making (MGEC 611) SAMPLE EXAM
Economics of Managerial Decision Making (MGEC 611) SAMPLE EXAM QUESTION 1 Short Questions. This part consists of three short, stand-alone questions of lower math intensity. Please provide an answer or
More informationThe fuzzy clustering method: Applications in the air transport market in Taiwan Received (in revised form): 4th August, 2003
The fuzzy clustering method: Applications in the air transport market in Taiwan Received (in revised form): 4th August, 2003 IanWen-YuChiang is a PhD student of shipping and transportation management at
More informationA monopoly market structure is one characterized by a single seller of a unique product with no close substitutes.
These notes provided by Laura Lamb are intended to complement class lectures. The notes are based on chapter 12 of Microeconomics and Behaviour 2 nd Canadian Edition by Frank and Parker (2004). Chapter
More informationPerceived Fairness of Yield Management
QUARTERLY CLASSIC: YIELD MANAGEMENT HOTEL OPERATIONS Perceived Fairness of Yield Management Applying yield-management principles to rate structures is complicated by what consumers perceive as unfair practices.
More information